Does USL-1 Need a Salary Cap?

USL-1 made a statement in the CONCACAF Champions League. No one will question this, and those like myself who have long been proponents of the second flight of American football were pleased by the results which saw USL-1 emerge on the media map in a mainstream fashion for the first time.

While the league as a whole has benefited from a public relations standpoint, the net result in terms of competition has given two teams a leg up on the rest of the league from both financially and by perception. The Puerto Rico Islanders in particular have opened up a gap in terms of talent with the rest of the league which can be interpreted as unhealthy for the league as a whole.

But USL-1, unlike MLS does not have any internal mechanisms to ensure a competitive balance and has seen many clubs either go out of business or relegated to lower division of the USL umbrella in recent years. While USL follows a strictly foreign model for football such as a single table (which I strongly oppose, but may work better in 2011 when the Pacific Northwest clubs leave for MLS), no salary limits, flexible squad limits, a form of relegation/promotion (financial instead of results based) and no revenue sharing, MLS follows a model to ensure survival and financial health.

In MLS, costs are controlled, while clubs are given every opportunity to improve and succeed. USL, is quite different as truthfully it is very difficult to win, attract fans and keep financially solvent in the league. The cream rises to the top but others fall by the wayside.

USL in some ways is more important than Major League Soccer because it keeps the flame of soccer alive in middle sized markets (as well as some massive markets like Miami and Long Island). The USL run PDL has also been critical in the development of turning college soccer players into professional footballers and in some cases US National Team players.

The success in Champions League proves the top USL teams are on the same level as MLS teams. I happen to believe the Puerto Rico Islanders would win in MLS with regularity but also concede that the squad they have assembled would be impossible to put together under MLS rules. But the issue here isn’t the quality and competitiveness of the Islanders or Montreal Impact but that of the bottom tier of USL-1 struggling to survive, perhaps especially now against richer clubs. These clubs wouldn’t stand a chance of staying competitive in MLS and now will have a tough time in their own league.

The lure of Champions League football has given the Islanders the ability to sign a number of players quickly of a high quality by USL-1 standards. No other team needed less offseason help in USL-1, yet made more big signings in the league. Players wanted to play in CONCACAF, and also receive the squad bonuses from advancement in that competition.

Puerto Rico has even been able to sign players directly from Europe recently, something that typically was difficult in USL. At one point Rochester has this same advantage, but the collapse of the Rhinos previous ownership group ended this ability of the club. The Islanders results have no gone unnoticed in Europe. I was in fact asked questions about this “American club the Islanders” in England and via the internet in January and February.

USL-1 finances aren’t as readily available as those of MLS, but my assumption is that Puerto Rico and Montreal made enough money during their deep CONCACAF runs to be able to spend far more on salaries than the US based USL clubs. When you further consider the fact that Puerto Rico may now have the type of team built where qualification is almost automatic each year what is to stop the Islanders from continuing to stockpile top players thus opening a bigger gap with the rest of the league.

One anonymous source from another USL club intimated to me last week that Islanders manager Colin Clarke was fed up with MLS because in Dallas when he suffered injuries he could not easily replace players and thus has vowed to have 2 ½ first team squads’ eventually in Puerto Rico.

Last week Minnesota Thunder President Manny Lagos (who was one of my favorite MLS players when he was with the Tampa Bay Mutiny) wrote an open letter to the fans of the Twin Cities discussing the quality of USL versus MLS. Here is a selection from that letter courtesy of Brian Quarstad at Inside Minnesota Soccer.

“One of the unique things about being a Minnesota resident is that we have an opportunity to see high-level professional soccer six months out of the year. Only 26 other communities (15 with MLS teams, 11 with USL-1 teams) in the country can say that. Our league continues to grow stronger on and off the field. While MLS certainly gets more media coverage than USL-1, the gap between the two leagues in terms of quality has virtually disappeared, evidenced by the fact that two teams in our league, the Montreal Impact and the Puerto Rico Islanders, have defeated the Mexican champions and the Honduran champions, respectively. In comparison, MLS sides have struggled in the competition.”

Basically this letter confirms my fears. The gap between teams like the Thunder and my local team Miami FC, and the Islanders/Impact are likely wider than the gap between the top teams in MLS and the bottom teams. Yet neither Minnesota nor Miami are necessarily bottom feeders in USL-1 this season. Both could make the playoffs, but unlike in MLS where the worst playoff qualifier, the Red Bulls went to the MLS Cup final last season, in USL-1 this type of run is unfathomable at this point in time.

Lagos is correct in stating that any gap that existed between MLS teams with Puerto Rico, Montreal and perhaps one or two USL-1 clubs has disappeared. But what has been left in its wake is a less competitive atmosphere around USL-1 and thus a less compelling product in some markets to get excited about unless the Islanders or Impact come to town. The gap between MLS teams and the Minnesota Thunder I am sad to say, Manny still exists, and the gap between your team and the two teams you reference is probably also as wide as the Gulf of Mexico.

The point is that Minnesota must ride off the coattails of the top teams to draw fans. I’ve done some of the same lobbying in south Florida to lure people to Miami FC matches the last two seasons. My pitch has been simple: “Puerto Rico is one of the best teams in the region and they play in USL-1.” All too often my pitch like that of those who like European football is “come and see the top teams. Manchester United is really good, so why don’t you watch Wigan?” The trickle down affect while sometimes effective is less reliable than MLS’ imposition of parity and stifling of super clubs development.

USL needs to develop a mechanism for revenue to flow from the top team in its first division down to the bottom teams. Since USL serves as an umbrella organization over leagues containing in excess of 100 clubs, often times the USL-1 clubs gets less assistance from the league than the smaller clubs.

Is a salary cap an answer? Perhaps, but a luxury tax where the top clubs have to pay the league a fine or tax on players signed over a league mandated limit may actually work better. For USL-1 to actually benefit from the surge in interest generated by CONCACAF, the league must make some fundamental changes to its structure to resemble MLS more without mimicking that league’s desire to completely impose parity and mediocrity.

About The Author

A lifelong lover of soccer, the beautiful game, he served from January 2010 until May 2013 as the Director of Communications and Public Relations for the North American Soccer League (NASL).
Raised on the Fort Lauderdale Strikers of the old NASL, Krishnaiyer previously hosted the American Soccer Show on the Champions Soccer Radio Network, the Major League Soccer Talk podcast and the EPL Talk Podcast.
His soccer writing has been featured by several media outlets including The Guardian and The Telegraph. He is the author of the book Blue With Envy about Manchester City FC.

29 Comments

So, you would advocate bringing the entire league down to the lowest level. Sorry Kartik but your loyalty to your local team is showing here. The biggest problem MLS has right now is the salary cap handicap. It insures we continue to seem mediocre soccer. The DP rule makes things worse by having a couple of stars with a bunch of nobodies.

The success Montreal and PR had in the Champs League is proof that teams can be successful and build quality teams without someone looking over their shoulder and making sure they don’t spend so much that they start acting like NASL teams. Look at how Montreal told MLS their expansion fees were crazy. Rochester chiefs said the same when things were rosy there.

No, the lack of a salary cap at the USL-1 level is a great thing and should be encouraged. In fact, I just wish that USL-1 owners were in a bitter situation to take on MLS head-to-head like the AFL did to the NFL back in the 60’s….but I’m a dreamer there. 🙂

The reason for such a gap to is the winner of the USL wins nothing. Sure, a midtable team can go to the Champions League, but if you are a mid table club, with half way decent attendance, and probably a good youth set up, and can turn a profit, you are better off that way.

MLS follows a model to ensure survival and financial health that creates mediocrity.

If the MLS continues it’s ways, a time will come when an MLS team will breakaway (or fold) and build a more competitive USL-1 team, rather than continue to play against weaker MLS teams amounting to nothing when they play international matches.

If the MLS goal is to play in a closed soccer league, with several mediocre teams, and without any regard to international level competition; then they are on the right track.

I don’t know if I agree with that. MLS is ensuring their financial viability, because owners have a communal wealth mentality. The fact that mediocrity is a result is only a side-effect for them.

But, look at the Premier League. The Big 4 and a couple of other clubs are the best at all times, and it rarely changes. Parity must be maintained, I argue, and in time rules will be relaxed somewhat, so that some teams will be able to compete internationally, and have more control over plays, salaries, etc.

Right now, MLS needs to remain solvent for the next decade…that takes precedence over anything else right now.

As for USL, there needs to be more central control in that league, other wise, it will continue to have a rotating roster of folding teams, etc.

Now, if MLS and USL could take some elements from eachother’s business plans, I think both leagues would be better off.

I agree with the above comments, the mediocrity that the MLS promotes through it’s value of “parity” is one of the worst things in said league – why would the USL ever want to emulate that?

Also, something to consider is that the PR Islanders operate with a very conservative budget, particularly compared to other top USL teams such as the Impact, Whitecaps, and Seattle when they were still around. What PR has achieved it has done so, not by buying the best players, but instead by ery smart recruiting and organization.

The USL is not a league that you could compare to the EPL in terms of wins = more money. The USL teams usually have a more limited market area and don’t receive the sufficient amount of publicity to have money suddenly pouring in.

Also, it is inaccurate to make it seem like the same teams end up being contenders year after year, after all – the Islanders made the USL Final for the first time last year and the year before that had made it to the semis for the first time also. I believe what the Impact and Islanders have done for the league has been of great benefit, to raise the standard across the board for USL sides.

Kartik, you’re bias is showing through here. You are a DC United fan whether you admit it or not. You do admit to being a Miami FC fan.

So the salary cap has hurt DCU in MLS, so let’s remove it, while replacing the USL competitive structure which has hurt Miami FC’s cheapskate Brazilian owners with forced parity.

The PR Islanders are the best thing in years to happen to US club soccer. MLS must step up its game to compete with the “General” Colin Clarke whose success has shown up the forced socialism of Don Garber, Bob Kraft and the Hunt Family.

I think this is written out of hope for Miami FC than any other real reason.

I’m a DCU fan. I would rather see MLS be financially successful than see DC United win the MLS Cup every year. Now, if both could happen, great. However, I think that dominance is similar to a monopoly in business: everyone ends up worse off. That is not a luxury that MLS has right now. All teams sink or swim together financially.

In the case of the EPL, which has an oligopolistic structure, everyone is in debt. The big 4 are all up to their ears in debt from the arms race with each other of paying larger and larger transfer fees and salaries. The other teams are slipping into debt because they have to spend more and more to stay in the Premiership and don’t get the infusion of Champions’ League money. They fight to stay in the Premiership because they lose lots of TV money if they drop to the Championship. They have a completely unregulated system and they’re all going broke together.

If I had a magic wand, I would make the USL more like MLS financially. More USL teams could exist, bringing more pro player jobs. More jobs will improve the quality of play and infrastructure for all levels of the game in our country.

I think USL need a Salary Cap but no like the one the MLS has impliment, Both League should work together and help one another to promote the Soccer in this Country. How is that? well using the Media promote each other on TV advertising. Use the USL as a Second Division so we can promote and relegate team from each League. Like in England (Priemier Carling, CocaCola) Italia (Seria A & SeriaB) Germany (Bunsdeliga1 And Bunsdeliga 2) or Spaing (La Liga & Division B) Set a Salary Cap with a 5-10million. Whatever team can affort the to reach the league Maximun is great , if can stay at the mid level good and if you can only be to the Minimun but is up to each team to be where the can financial can affort. We all want the soccer(football) to prosper in this country and we don’t want the league to go away or Bankcrupt but is this way we can bring a better quality of player and the quality of the game will be better in the field and more people come to enjoy good soccer.

I don’t know the gap between what the highest payroll USL team pays vs the lowest, and I think that data is required to accurately answer the question. Does dramatic parity like the Premier League has make sense. Not really, but does a tight cap where teams need to cut some players or force them to renegotiate contracts just to stay under the cap make sense, NO. There has to be a happy medium, and maybe it is some sort of Rev share or a luxury tax, where you still give each team an oppty to control their own destiny and make their own personnel decisions while keeping the huge gap down. I think you could share say 20% (i’m not stuck on this #) of revs from the gate into a bucket, and divy that up accordingly amongst the teams, while still allowing teams to keep their own advertising (shirt sponsers, in stadium etc) dollars. That way if a team out draws or plays in more games they still get an oppty to benefit from potentially more ad $’s but share some of the gate receipts.

Not to change the direction of the discussion, but does anyone know what the income statement of an MLS team looks like. We know the salary cap, but there are all of the back office etc. I am wondering how many fans based on avg ticket prices does each MLS team need to break even. Using some old data and 2.5mm cap here is the seats needed to cover the player payroll.

Let’s do this. Have a cup at the end of he year between the two champs and see what happens. The mls is a mediocre league. Part of he reason IS because of that salary cap but hey if that’s what u like fine by me I don’t care to have a competitive all around league, that’s for minor leagues. I want to see my club win it all

Having watched both leagues this year which I’ve never done before …..thanks free USL live!…..I have to say as someone that watches a lot of international football the play in the two leagues is similar. The difference is that MLS is played in bigger and nicer stadiums. Other than that USL is just as good. Seriously, from a trained football eye you cut through the B/S and the opinions of those with an agenda to promote MLS or untrained football eyes who are buying what they are sold.

I hope ratings for the CONCACAF final will be comparable to those of the UEFA final here in North America. It should because a) it’s on free TV in the USA, and b) it’s in prime time. Let’s hope it can measure up.

Teams are supposed to be constantly starting up and going out of business in leagues that are not yet solvent. If we’re talking about imposing salary caps to protect owners from their own stupidity, then I’m against it. The type of owners that would bankrupt their club are not the kind that are going to help the league grow. If we’re talking about imposing salary caps in order to encourage competitive balance, then I’m still against it. Again, the league is not yet solvent. Why should the Impact have to play down to the level of teams that’ll end up in the PDL in two years anyway? Salary caps are for leagues whose teams are stable and profitable.

Incidentally, I’d like to make a prediction at this point in time. While I think, in five years’ time, the bulk of the MLS’ more stable and popular clubs will still be playing, I have very little confidence that the MLS itself will be. In fact, in my opinion, there is precious little reason for it to exist at all. The 40 million dollar franchise fee is essentially a welfare check to bolster the revenue streams of the most incompetent clubs in the league. And more importantly, it has all the makings of a speculative bubble. The league is not yet in the black and they’re charging twice what the smallest team in the league is worth for admission? How do we know that this sudden appetite for expansion itself isn’t being driven by unprofitable clubs’ owners wanting a quick and easy return on their investment? Even the theory that the league’s single entity structure helps drive down costs is suspect. How can RBNY justify spending twice as much on Red Bull Arena than the combined worth of both Toronto and Montreal’s stadiums? Stadiums of comparable size in Europe are built for literally a fraction of what the most recent SSS’s in the states have cost (BMO Field aside). I have absolutely no confidence whatsoever in the league to be able to weather the recession, especially in light of the gate receipts of the league so far this season. If my suspicions prove to be well-founded, I pray to God teams like Seattle, LA, DC, Toronto etc. will be able to see the writing on the wall before it’s too late.

U.S.L is the league that will not be around in 5 years not MLS, I dont think I should have to explain why, because its pretty obvious, saying that the U.S.L is going to outlast the MLS is like saying the arena football league is going to outlast the NFL

…what does that even mean? The NFL is the most lucrative sports league in the world. The MLS is a league who owes its very existence to the fact that Alan Rothenberg was both its principal backer and the president of the USSF at the time the federation was considering bids to create a first division, where the owners are “investor-operators,” and which has a marketing arm that only channels a little less than sixty percent (13m out of at least 23m) of its revenues into the clubs themselves when the league as a whole is posting losses of 20 million annually. There’s no comparison.

USL-1 should look at the college football conferences where the money garnered by teams at competitions (ie bowl games in the case of college football) is split say 50% to the team in the competition and the other 50% is split equally amongst the rest of the teams in the conference. This may help the league’s viability. The owner’s and players of the teams winning the money may be resistant to this idea but if teams start to fold or fan interest starts to wane and the league folds then where will these owner’s and players be…the MLS? possibly.

Missing from this discussion is any consideration of what the players are actually making. Anyone have any ballpark idea how much the Addlerys and Sebrangos make, and how much the workaday reserves make? I’m guessing that they aren’t making enough for us to have a salary cap discussion with a straight face. For most players, the USL supplies a part-time income.

The MLS structure may help the league’s long-term survival, but the $40 million franchise fee creates an unhealthy barrier to growth. The EPL may have serious problems, but it’s in a country with hundreds of professional clubs. For soccer to work in America, we have to develop a similar grassroots culture. We need to make it easier, not harder, for fledgling clubs to get off the ground.